Amazon Considers Socking Its Most Loyal Customers With A 50% Price Hike

This chart showing Amazon's stock collapsing after it missed
analysts' revenue expectations last week tells you why the
company is considering raising the cost of Amazon Prime by $40,
or roughly 50%, to as much as $119.

Yahoo Finance

But it doesn't tell the full story, because raising the cost of
Amazon Prime — which lets customers get "free" two-day shipping
all year for a flat fee of $79 — won't likely boost sales. It
will more likely deter them by making the entry barrier higher
for new customers.

And that's why you should be skeptical of Amazon's official
statement that it may raise the price.

This is Amazon's dilemma: Raising the price would claw back extra
revenues that would assuage investors, but it may deter new
revenues from customers who think that $119 is just too much to
pay for "free" shipping.

On the one hand, Amazon will keep customers who have learned to
game the system because they order a lot of expensive, heavy
stuff, like this
guy in Florida:

Ditto for his recent bulky purchases: a five-foot tall electronic
meat smoker, heavy metal safe and garden composter. Portale said
that since Amazon doesn't take package weight into consideration
for Prime customers, he is getting more than his money's worth.
Even if the cost of Prime membership rose to $300, it would still
save him money, he claimed.

Given Amazon's history of eschewing profits in favor of growing
revenues, it actually makes more sense to cut the price of Amazon
Prime (and maybe add a weight limit) than to increase it. Amazon
has about $8.6 billion in cash on its balance sheet, so it can
afford to eat shipping costs for a while yet.

And given CEO Jeff Bezos' history of giving people what they want
cheaply, a Prime hike would be a huge counterintuitive move for
the company.